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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 31 of 53

Are you opposed to the WEP/GPO being repealed? It sure sounds like it. 

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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 32 of 53

@l508156s wrote:


 

 


The most you can get is 90% of your Social Security. This bit about them paying you your Social Security as if you are a low income wage earner is baloney. They are calculating it on quarters worked. I took the amount I make at my part time job $3800 and put it every year from 1972 to 2011 and I get $700 a month. But with my actual earnings I get 518. It seems to me they should be able to figure ones Social Security based on quarters paid. I  would even be okay with if they took the Social Security taxs I and my employer paid then applied interest earned on for the past 35 years.

Then took the amount and divided by life expectancy. 

Like the other poster said other companies have pension plans fot their employees so why are they not penalized. Why are State employees penalized their certainly goes in a different account and has no affect on the Federal budget. My money I paid into CSRS went into a different account. Personally I think any money earned before the law went into affect should be exempt from the formula. 

Simple fact is  SS was short of money in 1983 so they decided the fix it is keep some peoples Social Security. 


The Social Security formula for the Old Age benefit is based on the year of first eligibility (the year a person attains age 62 in retirement cases).  But then that figure is adjusted up or down depending upon when a person begins to draw the benefit.  It would go down, if say, a widow begins to draw a widows benefit at 60 instead of older or adjusted upward if a person waits until full retirement age to retire or even upwards more if they wait until 70 to draw their benefit. 

 

SSA: Benefit Calculation Examples for Workers Retiring in 2018

 

The formula used is affected by several different factors to come up with the AIME -

  • How long you work *
  • How much you make each year *

* To be eligible for benefits, a minimum amount of taxable earnings must be recorded for at least 40 quarters (10 years).

 

  • Inflation
  • What age you begin taking your benefits

This is the part where the calculations go off for those are affected by the WEP:

The Average Indexed Monthly Earnings (AIME) is the average of the top 420 months (35 years) of earnings, up to maximum taxable amounts, with past earnings through age 60 indexed to higher amounts to account for economy-wide average wage growth. For someone whose career was shorter, this can include months with $0 earnings. For someone who has already logged 35 years of earnings and continues working, payroll taxes continue, but new wages must be higher than wages from the top 420 months in order to have an impact on benefits.

 

Then when the Primary Insurance Amount (PIA)  is calculated to determine the amount of available benefits at the full retirement age (FRA), this calculation translates the AIME using a progressive benefit formula which provides a higher percentage of the AIME to lower waged workers and less for higher waged workers. The PIA formula provides a 90% replacement rate for the lowest range of the AIME, a 32% replacement rate for the middle range, and a 15% replacement rate for the upper range. The average benefit is about 40% of average wages in a given year.

 

Like I said, for those with several years (more than 10) of work under the SS system at a substantial earnings amount (based on year - see the chart) and then have the rest of their employment under a public system NOT under SS - the calculations cannot be made as normal because of this progressivity of the formula.  It could be done in some other way, most likely manually. 

 

And I do not know what this formula would be - I am not an actuary.

The amount of payroll withholding paid into the system by the worker and the employer or all by a a self-employed person has nothing to do with benefit calcualtion except that it is a % of the earnings the worker made for that year.

 

Other companies where an employee earns both a SS retirement benefit AND a company pension - were covered under both systems at the same time - the SS system and their pension system and both the worker and the employer paid into the systems as stipulated during their working years.  If many public employees want this - they have to do the same - be covered by BOTH systems - the employer, in this case a public entity has to cover their share of the SS payroll tax AND whatever contractual agreement is in their pension plan on matched monies.

 

An employee of a public entity that does NOT pay into the SS system does not get any vestment into the SS system - they paid into their pension program.

Let's look at it from a different perspective -

Suppose a worker works long enough in a job covered by SS to be fully vested in it and then goes to work for a public entity that is NOT covered by the SS system.  Many public systems in this regards would require the employee to work so long and have so much vested in their system to be able to draw a pension.  If for whatever the reason those requirements weren't met, they get no pension - if they have personally invested in it, they may get that money back but no matched amount from the public entity

 

So think of the WEP as a way of getting money back but no, or minimal, match by the SS system . 

It all has to do with the amount of time working under the system and the substantial income earned during that period. 

 

Is the current formula right or wrong - I don't know but the previous way of figuring it was definitely wrong; that is why it was fixed.. 

 

Here ya go - two perspectives from separate sides of the isle to show you how complex the issue is and the problem even with some of these proposed legislations:

 

Congressional Testimony - Rep of Mercatus Center 03/22/2016 - Restoring Equity and Fairness to the S...

 

NEA 03/23/2016 - Congress rethinking GPO-WEP, controversial laws that penalize retired educators

 

 

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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 33 of 53

This is like being punished for working hard and supporting your family. 

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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 34 of 53

@GailL1 wrote:

@BarbaraS357124

 

I have no doubt that the Windfall Elimination Provision needs some work - but that is the problem - the formula that it is used to compute any benefit.  The old method did not work because it was TOO generous, the new one maybe TOO punitive, maybe for some.  However, even the legislation that has been proposed is gonna still leave some high and dry.

 

I contend that the only way this may be fixed is by some special computation done as an exception, yes, perhaps manually, on a per person basis when this situation is apparent.  It would only make a substantial difference if the affected person has many years of working under the SS system with substanial earning.  The bend ponts now used to figure the PIA ( primary insurance amount ) from the AIME ( Average Indexed Monthly Earnings ) would have to be adjusted without giving the progressive benefit of a low income earner, as is normally done on a person who has worked their career under a job covered by the SS system.

 

There is NO other method that can produce a fair SS benefit because this situation is an outlier from regular benefits.  How much difference it would then make, figured this way without the progressive formula - I doubt too much.

 

TIME.com 04/22/2015 - This Little-Known Pension Rule May Slash Your Social Security Benefit

 

THIS IS THE PROBLEM >>>>>> The Social Security benefits calculating program uses a progressive formula that aims to return the highest amount to the lowest-earning workers—the same idea that drives our system of income tax brackets.

 

It is a complex formula, but here is the upshot: Without the WEP, a worker who had just 20 years of employment covered by Social Security, rather than 30, would be in position to get a much higher return because of those brackets.

 

. . . . Just because a person worked only a portion of their career with Social Security-covered employment, they should not be benefiting by getting a higher rate of return.

 

That was what was happening under the previous rule, under the regular computation and thus the reason why the WEP was initiated in the 80's.

 

Earlier in this thread I gave an example of a person who understood all the WEP and planned accordingly - He worked under the SS system for 30 years - early on, he worked for an employer under the system and then he became self-employed under which his earning were under the SS system at the same time he was working for a local school system.  So, he earned a nice pension from the school system AND worked 30 years with substantial earnings under the SS system - the WEP does not affect him at all.

 

If you have 30 years of Social Security-covered employment with somewhat of a minimum required substantial earnings, no WEP is applied.  Below that, a sliding WEP scale is applied.

 

The maximum loss is set at 50% of whatever you receive from your separate pension, so if that is relatively small, the WEP effect will be minimal.

 

Can you do anything to avoid getting whacked by WEP? Working longer in a Social Security-covered job before retiring might help. Remember, you are immune to the provision if you have 30 years of what Social Security defines as “substantial earnings” in covered work.

 

ALL Retirement income of whatever type REQUIRES Planning - Social Security, Pension, Tax-deferred plans, Non-tax deferred plans, where monies are invested and exposure to any gains or losses.

SSA: Windfall Elimination Provision explained - includes historic chart of "substantial earnings:

 

 

 


The most you can get is 90% of your Social Security. This bit about them paying you your Social Security as if you are a low income wage earner is baloney. They are calculating it on quarters worked. I took the amount I make at my part time job $3800 and put it every year from 1972 to 2011 and I get $700 a month. But with my actual earnings I get 518. It seems to me they should be able to figure ones Social Security based on quarters paid. I  would even be okay with if they took the Social Security taxs I and my employer paid then applied interest earned on for the past 35 years.

Then took the amount and divided by life expectancy. 

Like the other poster said other companies have pension plans fot their employees so why are they not penalized. Why are State employees penalized their certainly goes in a different account and has no affect on the Federal budget. My money I paid into CSRS went into a different account. Personally I think any money earned before the law went into affect should be exempt from the formula. 

Simple fact is  SS was short of money in 1983 so they decided the fix it is keep some peoples Social Security. 

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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 35 of 53

@BarbaraS357124

 

I have no doubt that the Windfall Elimination Provision needs some work - but that is the problem - the formula that it is used to compute any benefit.  The old method did not work because it was TOO generous, the new one maybe TOO punitive, maybe for some.  However, even the legislation that has been proposed is gonna still leave some high and dry.

 

I contend that the only way this may be fixed is by some special computation done as an exception, yes, perhaps manually, on a per person basis when this situation is apparent.  It would only make a substantial difference if the affected person has many years of working under the SS system with substanial earning.  The bend ponts now used to figure the PIA ( primary insurance amount ) from the AIME ( Average Indexed Monthly Earnings ) would have to be adjusted without giving the progressive benefit of a low income earner, as is normally done on a person who has worked their career under a job covered by the SS system.

 

There is NO other method that can produce a fair SS benefit because this situation is an outlier from regular benefits.  How much difference it would then make, figured this way without the progressive formula - I doubt too much.

 

TIME.com 04/22/2015 - This Little-Known Pension Rule May Slash Your Social Security Benefit

 

THIS IS THE PROBLEM >>>>>> The Social Security benefits calculating program uses a progressive formula that aims to return the highest amount to the lowest-earning workers—the same idea that drives our system of income tax brackets.

 

It is a complex formula, but here is the upshot: Without the WEP, a worker who had just 20 years of employment covered by Social Security, rather than 30, would be in position to get a much higher return because of those brackets.

 

. . . . Just because a person worked only a portion of their career with Social Security-covered employment, they should not be benefiting by getting a higher rate of return.

 

That was what was happening under the previous rule, under the regular computation and thus the reason why the WEP was initiated in the 80's.

 

Earlier in this thread I gave an example of a person who understood all the WEP and planned accordingly - He worked under the SS system for 30 years - early on, he worked for an employer under the system and then he became self-employed under which his earning were under the SS system at the same time he was working for a local school system.  So, he earned a nice pension from the school system AND worked 30 years with substantial earnings under the SS system - the WEP does not affect him at all.

 

If you have 30 years of Social Security-covered employment with somewhat of a minimum required substantial earnings, no WEP is applied.  Below that, a sliding WEP scale is applied.

 

The maximum loss is set at 50% of whatever you receive from your separate pension, so if that is relatively small, the WEP effect will be minimal.

 

Can you do anything to avoid getting whacked by WEP? Working longer in a Social Security-covered job before retiring might help. Remember, you are immune to the provision if you have 30 years of what Social Security defines as “substantial earnings” in covered work.

 

ALL Retirement income of whatever type REQUIRES Planning - Social Security, Pension, Tax-deferred plans, Non-tax deferred plans, where monies are invested and exposure to any gains or losses.

SSA: Windfall Elimination Provision explained - includes historic chart of "substantial earnings:

 

 

 

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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 36 of 53

This should be a no brainer as far as repealing the WPO & GPO.  This issue crosses party lines.   Our teachers and other service providers give their whole lives and only want what’s fair.  No one is asking to get money from SS security if they haven’t contributed.

 

In the majority of cases, like my own, people have put into BOTH Social Security and pensions.  People in the private sector can get both at retirement. Why should teachers or other service providers be any different. Why is that considered double dipping when business executives do it all the time.

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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 37 of 53

@LonnieC924336 wrote:

I am losing over $300 a month because of this tax.I get two partial checks instead of a full retirement. i worked 24 years for s.s. and 19 years for the school system.I got cheated Big Time.


You could work for (6) more years, earning what the government deems to be substantial earnings

under  a job covered by the SS system and the WEP would go away -   Substantial earnings has also a definition under the SS system - defined by year - in 2018, a bit less than $ 2000 a month - but the figure is actually a yearly figure.

 

SSA Windfall Elimination Provision

from the link ~

If you paid Social Security tax on 30 years of substantial earnings you are not affected by WEP.

 

There is also a chart of the "substantial earnings" by year in this pamphlet (above link).

 

Sorry can't help you with your school system pension - that is a local matter.

 

 

 

 

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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 38 of 53

I am losing over $300 a month because of this tax.I get two partial checks instead of a full retirement. i worked 24 years for s.s. and 19 years for the school system.I got cheated Big Time.

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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 39 of 53
The system knows how to tell the difference between a lifetime low income wage earner and someone who only worked 10 years. I tried an experiment. I plugged in $3700 for each year from 1971-2018. My benefit was $760. Doing it with my actual years and income I get $518. So it goes to show the theory behind WEP is flawed. They stole a days pay 3 out 4 years on top of eliminating a good chunk of our Social Security. And what about folks that after 20 years gave up a good career to teach expecting they would get their Social Security.
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Re: Repealing the Social Security Windfall Elimination Provision And Pension Offset 2017 Legislation

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Message 40 of 53

I have all required quarters and more. I paid into Social Security both before and after I worked for the Government. I sorta of understand what you are saying but on the other hand why can some who worked the same amonunt of time with the same number of quarters get all their Socila Security and I can't.  I do not expect to get what someone who worked 35-40 years but I would like more then the 40% they might give me.My Civil Service Retiremrnt went into a different pot of money. Same for City and State Workers. Social Security has had my money since 1981 and I am sure they have made plenty of interest off it. The real issue is not double dipping but the fact Congress has been using Social Security to pay for stuff.  

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